London Session Forex Recap – Nov. 26, 2014

  • U.K. GDP q/q (2nd est.) at 0.7% vs. 0.7% forecast/previous
  • U.K. CBI Distributive Trades: 27% bal vs. 28% bal forecast, 31% bal previous

The main market mover for the morning London session came from the U.K. in the form of the quarterly GDP data.  It was a second look at the health of the U.K. economy, which is why it was no surprise that it came inline with the first read.  What was a surprise was the bullish behavior, even with the CBI distributive trades data coming in lower than expected to show a slight slowdown in retail activity. After the initial whipsaw action, Sterling rallied against the majors but the momentum has slowed as we roll into the U.S. session.  Since hitting a session low around 1.5680, GBP/USD rallied around 109 pips after the data to highs around 1.5787 for the session.

The other market mover on the session is the Australian dollar, taking another hit on several themes that have been driving its weakness all week, namely a slowdown in China, falling metals prices, and bearish comments from RBA Deputy Governor Philip Lowe. The selling pressure came right at the London open but we’re seeing a bounce higher at the moment in Aussie pairs:

AUD/USD is down 25 pips (-0.3%) to .8503, AUD/JPY is down 43 pips (-0.44%) to 100.17, and AUD/NZD is down 49 pips (-0.46%) to 1.0866

The forex calendar for the Wednesday afternoon London/morning U.S. session is pretty packed as the U.S. releases many of its data points early ahead of the Thanksgiving holiday.

The bulk of the data will come out at 1:30 pm GMT, including personal income and spending, core PCE price index data, durable goods, and the weekly initial jobless claims data. The likely market mover is the durable goods orders as it can be an indicator of future health in the factory sector. The forecast is for the headline number to come in at -0.6% vs. -1.1% previous, while the core read (minus transportation items) is expected to improve to 0.5% vs. -0.1% previous.  The core number is the one most economists pay attention to as it gives a better sense of the overall trend.

The day’s data deluge will begin to close out starting out with the Chicago PMI number at 2:45 pm GMT, the final read from the University of Michigan sentiment survey at 2:55 pm GMT, and the pending and new home sales data at 3:00 pm GMT.  The Chicago PMI release (63 forecast vs. 66.2 previous) may have the most potential for volatility among the group, but all are mid-tier data points that will most likely not cause a ripple in the markets without a big surprise.

This is likely to be the last day that we’ll see any meaningful forex trading volume from the U.S. markets this week, so keep an eye out for any unusual moves as U.S. traders may square up positions ahead of the holiday. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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